#46 Why the US Spends So Much on Health Care

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Aug 19, 2025

Explore the staggering costs of U.S. healthcare, illustrated by a jaw-dropping $189,000 cancer surgery bill. Discover why spending surpasses $5 trillion while health outcomes lag behind other developed nations. Uncover the reasons rooted in high prices, professional salaries, and unnecessary procedures, impacting both employers and individuals. Delve into the looming challenges facing Medicare and the growing burden of premiums and deductibles, all while the U.S. ranks poorly in life expectancy and infant mortality.

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ANECDOTE

Shocking Personal Cancer Billing

Dr. Bobby DuBois shares a family member's outpatient cancer surgery bill of $189,000 and a drug costing $12,000 per month.
The patient had Medicare and paid little, but the sticker shock revealed pricing dynamics in U.S. care.

INSIGHT

Healthcare Costs Threaten National Budget

The U.S. spends about $5 trillion on healthcare, roughly 18% of GDP, and costs are growing 5–8% yearly.
That growth outpaces GDP and inflation and threatens program solvency like Medicare.

INSIGHT

High Spending, Poorer Outcomes

The U.S. spends roughly $12,000 per person, about three times the OECD average, yet has worse infant mortality and life expectancy rankings.
High spending hasn't translated into better population health compared with peers.

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Why are U.S. health care costs so high—and what does that mean for you and your family? In this episode, I dive into the real reasons behind America’s staggering health care bills.

We start with a story that hits close to home—a $189,000 outpatient cancer surgery bill followed by $12,000-a-month immunotherapy—and I unpack how even with Medicare coverage, the pricing dynamics can feel shocking. Using my experience as a physician and health policy researcher, I explain why these massive charges happen and where the system is breaking down.

At the national level, we now spend over $5 trillion a year on health care—roughly 18% of our GDP—and this number is growing far faster than inflation. This growth threatens the solvency of key programs like Medicare, which is projected to run out of funds by 2033 (Health Affairs). Employers are also feeling the pinch, with average family coverage costs now topping $25,500 annually (WSJ). Individuals, especially those using ACA exchanges, face rising premiums—some increasing by 20–30% next year (Axios)—and deductibles between $3,000 and $5,000 are now typical.

Despite all this spending, our health outcomes are among the worst in the developed world. The U.S. ranks 33rd in infant mortality and 32nd in life expectancy out of 38 OECD countries, even though we spend about $12,000 per person annually—nearly three times the OECD average (America's Health Rankings).

So, what drives these costs? It boils down to three factors: high prices, high utilization, and high administrative overhead. Prices for common procedures are far above international norms—a CT scan in the U.S. costs around $900 compared to $279 in the Netherlands and just $97 in Canada (Health Imaging). U.S. physicians, nurses, and hospital executives also earn significantly more, contributing to overall spending (Medscape; JAMA).

On the utilization front, studies estimate that around 25% of all care may be unnecessary, driven by defensive medicine, patient expectations, and incentive structures that reward more procedures—not necessarily better outcomes (PGPF; Choosing Wisely).

Even administrative overhead plays a massive role: nearly 25% of U.S. health care spending goes to bureaucracy—four times what’s typical in simpler, single-payer systems (Health System Tracker; Health Affairs%20of%20US%20GDP)).

If you’re wondering why your doctor spends just 17 minutes with you or why your premiums feel like a second mortgage, this episode offers the context—and data—to help you understand what’s really going on.

Takeaways:
Start asking about cash prices—especially if you're still in your deductible phase. Preventive steps like regular exercise may offer the highest return on investment when compared to costly downstream care. And above all, consider your plan carefully during open enrollment.

For deeper insights, links to all the studies mentioned, and access to my newslet